Salary vs. Hourly: How to Compare Job Offers Without Getting Tricked by the Numbers

A recruiter offers you $60,000 a year. Another company offers $28/hour. Which pays more? At first glance, the salary seems better. But $28/hour at 40 hours per week for 52 weeks is $58,240 — close, but the hourly role might pay overtime at $42/hour. If you average just 3 hours of overtime per week, the hourly job actually pays more. These comparisons are never as simple as they look.

The Basic Conversion Formula

The standard conversion assumes 40 hours per week and 52 weeks per year (2,080 hours annually):

• Hourly to annual: Hourly rate × 2,080 = Annual salary
• Annual to hourly: Annual salary ÷ 2,080 = Hourly rate
• $25/hour = $52,000/year
• $50,000/year = $24.04/hour
• $75,000/year = $36.06/hour
• $100,000/year = $48.08/hour

But this formula is misleading because it assumes you actually work — and get paid for — every single week of the year. In reality, vacation time, sick days, and holidays change the math significantly.

The Unpaid Time Trap

Salaried employees typically get paid vacation and holidays. Hourly workers often don't. Here's how that changes the comparison:

• Salaried at $60,000/year with 3 weeks vacation and 10 stat holidays: You're paid for all 52 weeks. Effective hourly rate: $28.85/hour.
• Hourly at $30/hour with 3 weeks unpaid vacation and 10 unpaid holidays: You work 47 weeks × 40 hours = 1,880 hours. Annual pay: $56,400 — not $62,400.
• The salaried worker earns $3,600 more despite the hourly rate appearing lower.

The Hidden Value of Benefits

Salary comparisons that ignore benefits are incomplete. A typical Canadian employer benefits package adds 15-25% on top of salary:

• Extended health & dental insurance: $2,000-$5,000/year value
• Employer pension/RRSP matching: Often 3-6% of salary ($1,800-$6,000 on a $60K salary)
• Life and disability insurance: $500-$1,500/year value
• Paid vacation: 2-4 weeks (worth $2,300-$4,600 at $30/hour)
• Paid sick days: 5-10 days/year (worth $1,200-$2,400 at $30/hour)
• Professional development budget: $500-$2,000/year

A $60,000 salary with full benefits often has a total compensation value of $70,000-$75,000. An hourly contractor at $35/hour ($72,800 gross) with no benefits might actually be earning less when you factor in self-paid insurance, no paid vacation, and no pension matching.

Overtime: Where Hourly Workers Win

In most Canadian provinces, overtime kicks in after 44 hours per week (40 in some provinces) and is paid at 1.5× the regular rate. Salaried employees are often "exempt" from overtime — meaning those extra hours are effectively unpaid. This is where hourly positions can significantly outperform salary.

• $30/hour with 5 hours overtime/week: $30 × 40 + $45 × 5 = $1,425/week = $74,100/year
• Salaried at $70,000 working 45 hours/week: $70,000 ÷ (45 × 52) = $29.91 effective hourly rate
• The hourly worker earns $4,100 more AND gets compensated for every extra hour

Freelance and Contract Work: The 30% Rule

If you're considering freelancing, a common rule of thumb is to charge at least 30-50% more than the equivalent salary hourly rate. This covers: self-employment CPP contributions (both employer and employee portions), no paid vacation or sick days, no benefits, your own equipment and office space, unpaid time spent on administration, invoicing, and marketing.

So if a salaried position pays $80,000/year ($38.46/hour), a freelancer should charge at least $50-$58/hour to maintain equivalent take-home pay after expenses. Many experienced freelancers recommend even higher rates to account for inconsistent work and the time spent finding clients.

Pay Periods in Canada: Quick Reference

• Weekly: 52 pay periods/year. Common in trades and retail.
• Bi-weekly (every 2 weeks): 26 pay periods/year. Most common in Canada. Note: 2 months per year have 3 pay periods.
• Semi-monthly (1st and 15th): 24 pay periods/year. Common in government and corporate roles.
• Monthly: 12 pay periods/year. Less common in Canada, more typical in Europe.

The difference between bi-weekly and semi-monthly trips up many people. Bi-weekly (26 periods) means you receive 2 extra payments per year compared to semi-monthly (24 periods). On a $60,000 salary: bi-weekly pay is $2,307.69 per paycheck, while semi-monthly is $2,500 per paycheck — but the annual total is the same.